Tuesday, March 11, 2008

Cronyism and The Act of Hiding

Government-linked stocks or GLC in short are being termed as such as these companies have major shareholders whom are government-based. GLCs are always under analysts and fund managers' radar as these companies are normally main beneficiaries of economic policies or government projects.

On the other hand, cronies are related parties that can secure projects from the government due to the relation that they have with the government. Are GLCs cronies? Many would standby to say no as no doubt that some GLCs are run by solid management and they have good business model in place.

But why is it that when the government announces a big project or economic policy and stock prices of certain GLCs increase as a result? That's before any tender is being called. What can be more interesting than to use the recent effect from the takeover of the 5 states by the opposition-led coalition on our stock market? Stock prices of GLCs and companies that are known to be politically connected all went for a dive in their share prices. It's so obvious that it is cronyism.

Although we are not sure whether the opposition can lead the states better, we as layman investors surely hope that there are no more cronyism. Ideally, companies should be awarded tenders via the best quotations and that will lead to the best usage of the country's limited resources. Well, that's a really long term view (or call it a dream) that we would want Malaysia to achieve.

I would like to take the opportunity to salute Tan Sri Dr Koh Tsu Koon for the utmost dignified way a defeated politican could show. He called Penang DAP Chairman Chow Kon Yeow on late Saturday night to throw in his white flag and assured the DAP Chairman that there will be a smooth transition of power. Have my kudos Tan Sri Koh...

On the other hand, I would not like to miss this opportunity to also send my greatest salute to Selangor Menteri Besar Datuk Seri Khir Toyo and MIC President Datuk Seri S Samy Vellu. Using ninjas-alike skills, both the chiefs have vanished without a single noise from the public since the election night. The Selangor Menteri Besar Datuk Seri Khir Toyo had also managed to destroy some "confidential documents" at his State Government Office. Let me salute you with my foot on your great act of hiding. No offence.

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